Property investors in Bulgaria can find bargain real estate and haggle the price down by up to 30%, it is claimed. Russian buyers are snapping up cut price properties, according to commentators.
Those taking part in the recent BalREc real estate conference said that the property market is thawing but few are making predictions for a recovery in the near future. ‘Times are difficult but buyers can make an acquisition at a profitable price, according to Yael Arnon, head of business development and regional director at real estate developer AFI Europe.
Affordability is going to be the key to a market recovery, according to much of the industry. Developers need to reach out to native buyers and stop relying on foreign investment, according to some experts.
‘There is a need to stimulate the construction of homes for the low end and middle class,’ said Georgi Shopov, general manager of engineering and construction firm Tobo. And Plamen Andreev, general manager of construction firm Planex Holding, said the state should help developers. ‘Homes at affordable prices would be difficult to build without state support,’ he said. He wants the state or municipalities to offer construction companies land in exchange for a contractual duty to build blocks of flats, apartments which would then be sold at a fixed price, possibly no higher than €650 a square meter.
‘The residential market depends not so much on the price of the real estate, as it does on its affordability,’ according to Miroslav Beikov, chief executive of real estate investment fund Status Imoti.
He added that Bulgaria could look to other states such as Serbia, where young couples did not pay value-added tax on their first home, and Belarus, where the state guarantees that construction is finished if the building company goes bankrupt.
There are profits being made from wealthy foreign investors, particularly Russians. One company, Home for You, has been buying residential real estate in bulk at prices ranging from €390 to €650 a square meter, in Sofia, Varna, Bansko and Black Sea resorts and then selling them to wealthy Russian customers from Siberia and the Ural region at a profit margin of 20%.
Russia and other countries from the former Soviet Union are the main markets for Bulgarian holiday homes and Bulgarian real estate. Some in the industry want visa requirements to be relaxed that would encourage more investors.
Architect Stefan Dobrev said that it was the high environmental standards of construction and the low degree of construction density that makes the market attractive to Russian buyers. According to Dobrev, one holiday homes development, a fair distance from the beach in the Black Sea resort of Sunny Beach, sold for prices comparable to beach front properties.
Meanwhile, a new law could ban all real estate payments made in cash. An amendment of the Notary Act due to become law from January 1, 2010, means that all transactions will be conducted via bank transfers.